EROEI is a useful analytical tool, as long as it is properly understood as a shifting techno-historical variable, and not a cosmic-ecological constant. The amount of energy required to access a given type of energy reserves depends hugely upon the intelligence of the approach, as crystallized within technology and economic institutions.

The ‘Pascal scams’ critique is important, but also one-sided. If taken seriously, it would dismiss Black Swan possibilities as little more than hoaxes, which leads to a problematic cognitive bias of its own.

1) Forgetting that historical and present marginal supply and demand responses reveal information *only at those margins* and not beyond them, thus misestimating the sensitivity to prices, in combination with:

2) Not accounting for secular trends in technology; where increasing capabilities and lowered costs intersect with 1), placing much faith in existing production models is foolhardy.

There are of course plenty of sensible policy options, in an ideal world, but far less in the real one. Energy consumption subsidies are almost unimaginably stupid, but for a number of societies they cannot be eliminated without triggering a revolution. If stupidity means survival, no regime is going to opt for intelligence.

Similarly, it would make (abstract) sense to eliminate all income and corporate taxes, replacing them entirely with energy, raw materials consumption, and pollution taxes. How politically plausible is that? It’s scarcely necessary to answer.

As far as “peak anything” goes (or is that peak “anything goes”?), there seems to be a typical dysfunction in the attempt to achieve dialectic compromise in our age.

First someone makes a reckless and alarmist claim – all kinds of environmental proximate apocalyptic scenarios fit this model. Then the extreme claim is easily refuted, but instead of finding a reasonable moderation of positions, the whole concept is dismissed absolutely as being completely disposed. “The Science is Settled!”

I often find myself turned off by these sorts of “Discrete, Boolean Resolutions” to debates on Continuous, Marginal subjects.

Here’s a moderation between the ‘peak oil’ alarmist position and ‘nothing to see here’ dismissive one:

While fossil petroleum may not be running out, and while global production may not be on the decline, demand remains high and growing (look at the trend in numbers of new internal combustion engines being produced each year in Asia), while the growth rate in product supplied to market is low and the price to sustain production is high compared to other Historical periods. In other words, petroleum is relatively more scarce relative to demand than it used to be, and the total factor productivity of extraction is lower than it used to be (and declining).

Compare this decline with, for example, total-factor productivity in information technology (which has exploded over the past few decades in ways without Historical precedent), with TFP in agriculture (stagnating but stable, more or less).

Since the global economy is heavily dependent on petroleum and sensitive to its price (Singapore, for example, almost entirely so – 90% of all primary energy consumption), then we should adjust our plans and visions of the future to include one where elevated (+$100 Barrel) prices are the norm and overall supply is highly inelastic. This is basically the CEA scenario, and their vision have been well borne out by recent data. And this has some very serious implications especially in regard to the feasibility of productive-factor accumulation growth-strategies in lesser developed countries.

In other words, the era of easy, cheap, ‘low-hanging-fruit’ motor fuels is over, and that has major consequences for the future development of the world economy; to include major shifts in living and patterns of behavior and economic activities in countries heavily dependent on petroleum. In a way, it’s not much different from water issues in the Western United States, and people there have simply learned to live with less.

Technological progress in costly and resource-intensive extraction seems to be helpful mostly in stretching what would have been a 70’s-style supply shock into a long, slow rise in real prices. I don’t think it’s all that alarmist to think that oil goes to $200 a barrel by 2025. If this happens steadily and predictably then we can probably adjust without a debilitating crisis. Citizens of poor nations will probably be locked out of the mass automobilization of their societies for some time.

When you put the “peak oil” idea that way, it seems completely reasonable to me – even (potentially) justifying some proactive precautionary policies – just in case. It seems to me the difference between this realistic framing and peak-oil alarmism is mostly one of magnitude.

The art of investment is being right slightly more than 50% of the time. To that end people who can flexibly switch their opinions on a dime, and often times make investments under simultaneously contradicting theses, tend to be the best investors. This is a different game than political philosophy (or any type of philosophy), where most intellectual effort should be going into figuring out how new information fits into existing frameworks. A good political philosopher shouldn’t commit to major ideas until the evidence is substantial, and as such shouldn’t be constantly changing his mind. This is in contrast to uber-traders like George Soros who literally flips his positions if he gets a back ache. That’s why he makes a great investor, but a mush-headed intellectual.